You might have heard a co-worker casually mention investing in FANG stocks, or perhaps your favorite nightly news anchor threw out the term while giving a recap on the stock market's performance for the day.
If you have FOMO because you don't understand this acronym, fear not! The team at Wela is here to help. We've asked our advisors to help clarify what FANG stocks are and why people keep talking about them.
What are FANG stocks?
FANG stands for Facebook, Amazon, Netflix, and Google.
(*Note: Google has changed its business structure and is now going by Alphabet; however, their ticker still starts with a G, so we're sticking with FANG. Plus it sounds much better than FANA.)
Why do they have their own acronym?
The acronym was created by the host of CNBC’s Mad Money, Jim Cramer, a few years ago due to their high growth potential.
Who talks about them?
All investment professionals and individuals that take an active interest in market activity. More specificially, people who watch CNBC.
Should the average investor know what FANG stocks are?
The average investor should be familiar with the acronym FANG because the average person uses a service by one or all of these companies on a daily basis. However, the relevance of the acronym will fade if the collection of stocks does not continue to outperform the market.
When did people start talking about FANG stocks?
Talk of FANG really picked up mid to late 2015 after posting a historic run throughout the year. Collectively, FANG stocks were up 60.69% in 2015 while the S&P 500 was down .73%. In fact, the S&P 500 excluding FANG was down 4.8% in 2015.
Typically it is a bad sign for the overall market when FANG is outperforming it. Investors are essentially saying that they can’t find growth elsewhere in the market, so they are forced to concentrate on those four stocks.
Do people still care about FANG stocks in 2016 since the market has been so volatile?
Fang stocks are still watched closely, however, they have underperformed the market so far in 2016. FANG stocks are down 14.4% YTD, while the S&P 500 is only down 7%.